Property investment can still work in 2025 — if the numbers stack up and your lending is structured well. As a mortgage broker in Tauranga, I help clients decide whether they can buy a rental now using savings or equity, and which loan setup keeps cash flow sane.
1) Funding the deposit: cash vs equity
You don’t always need a cash deposit. If you own a home with equity, you may be able to use it for the rental’s deposit and costs.
- Equity example: Home value $800k; mortgage $480k → equity $320k. At 80% lending ($640k), potential usable equity ≈ $160k (subject to servicing and lender policy).
- Cash deposit: For investor lending, banks often want higher deposits than owner-occupied loans.
2) Rentvesting (first-timers)
If you’re priced out of your preferred suburb, consider buying a rental in a more affordable area while you continue to rent where you live. You’ll need a larger deposit and must be comfortable being a landlord. KiwiSaver withdrawals generally apply to homes you will live in, not pure investments.
3) What lenders look for
- Servicing: income, existing debts, and stress-tested repayments.
- Rental yield: realistic rent and local tenant demand.
- Credit conduct: clean statements and on-time payments.
- Security: standard titles, insurable construction, Healthy Homes compliance.
4) Choosing the right loan structure
- Interest-only period: improves short-term cash flow while rents catch up.
- Split rates: part fixed for certainty, part floating for flexibility.
- Offset / revolving credit: park surplus cash to reduce interest without locking it away.
Your mortgage broker Tauranga can show the cash-flow impact of each and align it with your tax and risk settings.
5) Costs many new investors forget
- Vacancy periods and letting fees
- Maintenance and Healthy Homes upgrades
- Insurance excesses and rate rises
- Accountant and property-management fees
6) Example — using equity in Tauranga
A Bethlehem couple owned a home worth $900k with $500k owing. We released equity for a $220k deposit and secured an investment loan on a Papamoa townhouse. Rent covered most repayments; we used a split structure to balance certainty and flexibility. Their plan includes small extra payments to reduce total interest over time.
7) Quick pre-purchase checklist
- Confirm usable equity and servicing capacity.
- Get a realistic rent appraisal and cash-flow model.
- Order a building inspection; confirm insurance availability.
- Set buffers for repairs and vacancies (3–6 months’ costs).
Bottom line
Yes — you can buy a rental if the equity, cash flow, and structure are right. If you want help comparing lenders or modelling yield versus repayments, I’m happy to assist.
Book a free chat to see your borrowing power and the best home loan Tauranga options for your investment plan.
Best Mortgages — Operated by Ewald Biesenbach (FSP 320426) under The Best Limited (FSP 724451 – NZBN 9429043352067). Licensed under the Financial Services Legislation Act 2019.What are the deposit requirements for buying an investment property in New Zealand?
Most banks require a 30 % deposit for standard investment lending. However, if you have strong income or use equity from your existing home, some lenders may accept less. Non-bank options can be even more flexible. A mortgage broker Tauranga can compare which lenders still offer low-deposit investor loans.
How does using home equity to buy a rental property work?
Equity is the difference between your home’s current value and what you still owe. You can usually borrow up to 80 % of that value, using the released funds as the rental’s deposit. Your broker calculates how much equity is available and ensures repayments remain affordable.
What lender criteria affect approval for investment loans?
Banks assess income stability, overall debt-to-income ratio (DTI), credit conduct, and expected rent from the new property. They also test affordability at higher “stress” rates. A home loan Tauranga specialist can help you meet those criteria and present your application to multiple lenders efficiently.
How do I calculate rental yield and cash flow?
Rental yield = (annual rent ÷ purchase price) × 100. For example, $650 per week on a $650 000 property equals a 5.2 % gross yield. Subtract rates, insurance, and maintenance to find net yield. A mortgage broker can help you model cash flow with realistic interest, vacancy, and maintenance assumptions.
What tax implications come with owning a rental property?
Rental income must be declared, but you can usually claim expenses such as rates, insurance, and property-management fees. Interest-deductibility rules have recently changed, so check current IRD guidance or talk with your accountant. A broker can ensure your loan structure supports efficient record-keeping.
